As predicted, Nassau Broadcasting Partners has asked a US Bankruptcy Court to convert the involuntary Chapter 7 bankruptcy liquidation petition filed by its lenders to a chapter 11 proceeding that would allow the radio company to continue operating. Nassau notes that it has positive cash flow.
US Bankruptcy Judge Kevin Gross (the same judge overseeing the long Tribune Company bankruptcy) was due to hear arguments Thursday (10/6) on various motions related to the Chapter 7 petition filed by Goldman Sachs Lending Partners LLC, Fortress Credit Opportunities I LP and P.E. Capital LLC and the attempt by Nassau to convert the case to a voluntary Chapter 11 proceeding.
“The Debtors operate 49 radio stations in the Mid Atlantic and New England regions of the country, and they have 365 employees, in the aggregate. To be sure, a cessation of operations, and/or the negative effects of the Debtors remaining in Chapter 7, would undoubtedly impair the going concern value of the Debtor’s businesses, to the detriment of the Debtors, their estates, creditors, employees, listeners and other parties in interest,” Nassau argued in its motion to convert the proceeding to Chapter 11, which would allow the company to reorganize its finances rather than liquidate.
Nassau included a copy of a letter to its President, Lou Mercatanti, from Goldman Sachs on August 4th which insisted that Nassau should file a voluntary Chapter 11 petition by September 4th. The lenders wanted the radio company to be put up for auction under Section 363 of the Bankruptcy Code. Under a 363 sale the lenders envisioned that they would make a “stalking horse” bid for the company and provide financing for Nassau to operate in Chapter 11 and consummate the sale of the company.
Of course, Nassau did not file Chapter 11 by the September 4th deadline. The lenders filed the involuntary Chapter 7 petitions for Nassau and its various subsidiaries on September 15th.
It was not known how soon Judge Gross would rule after hearing the arguments on Thursday, but due to the nature of the case it seems likely he will decide quickly whether the bankruptcy case will proceed as Chapter 7 or Chapter 11.